News Column

PZ Cussons Posts Higher Annual Profit Despite Revenue Decline

July 29, 2014

Rowena Harris-Doughty

LONDON (Alliance News) - Consumer products group PZ Cussons PLC Tuesday posted higher profits for its last financial year, despite a slight dip in revenue, boosted by the sales of its Polish home care brands during the year and growth from recent acquisitions and joint ventures.

The maker of brands including Imperial Leather and Original Source bath products and St Tropez tanning products reported a pretax profit of GBP123.7 million for the financial year ended May 31, up from GBP94.8 million the prior year. The profit rise was partly due to an exceptional gain of GBP8.7 million during the year from the sales of its Polish home care brands, compared to an exceptional charge of GBP12.7 million the prior year.

The group also said that a significant weakening in other currencies against the pound wiped around GBP12 million off its profit for the year.

PZ Cussons reported a small decline in revenue to GBP861.4 million from GBP883.2 million, on the back of lower sales from Europe after having sold its Polish home care brands, and on a small reduction in revenue from Africa due to increased levels of disruption in northern Nigeria, due to the Boko Haram insurgency.

PZ Cussons said that trading conditions remain challenging in most of its markets, but its hoping to home in of new areas of growth such as its Rafferty's Garden baby-food brand and the Wilmar joint venture.

"These initiatives will help to offset the continuing macro challenges, including foreign exchange volatility, and the reduction in profits from Poland as a result of the strategic Home Care brands sale," said Chairman Richard Harvey in a statement.

The company declared a total dividend for the year of 7.76 pence per share, a 5% increase on the 7.39 pence declared the prior year.

Regionally, the group said it saw a strong performance in its UK washing and bathing division, with strong sales growth from its brands Imperial Leather, Carex and Original Source, which it said was driven by a significant renovation and innovation programme.

Within its beauty division, the company said consumer demand for its St Tropez tanning products continued to be boosted by the appointment of the model Kate Moss as brand ambassador.

In Africa, the group said trading during the year was hit by the unrest in northern Nigeria, and profitability in Ghana continues to be held back by further weakening in the cedi. Kenya meanwhile, it said, performed in line with expectation.

In Asia, PZ Cussons said that its brands Morning Fresh and Radiant performed well during the year, but profitability in Australia was hit by a weaker Australian dollar, and in Indonesia from a weaker Indonesian rupiah, both against the pound. The group said that the acquisition of Rafferty's Garden boosted profits in the region.

"The group's balance sheet remains strong and well placed to pursue new areas of growth. The overall performance of the group since the year-end has been in line with management expectations," the company said.

PZ Cussons shares were trading 1.2% higher in early trading Tuesday at 351.90 pence per share.

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Source: Alliance News

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